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Domestic growth is strong, but what does the international future hold for Charlotte Douglas?

Charlotte Douglas International Airport is the second-busiest hub in the new American Airlines system. But most of Charlotte’s 700 daily flights are to domestic destinations, not the high-prestige international destinations economic developers covet.

Charlotte Douglas is growing: American is adding a second daily flight from Charlotte to London, and the airline has added five new Midwest destinations since its December merger with US Airways.

But Charlotte faces stiff competition for international service. Six of American’s nine hubs – Philadelphia, Chicago, Miami, Dallas/Fort Worth, Los Angeles and New York’s JFK International Airport – have larger international operations and bigger population bases to support them.

Dallas/Fort Worth, American’s busiest hub, added service to China and new flights by Emirates, Qatar and Etihad Airways this year. Qatar also started new flights between Philadelphia and Miami and Doha.

At Charlotte, American started four seasonal European destinations this summer. But the flights’ schedules were cut back early because of weak demand. The airport doesn’t have a direct flight to Asia or the Middle East either. And American also said flights to Asia from Charlotte aren’t on the horizon right now.

“The challenge we have right now is we don’t have enough of a (local traveler) base to really support a major international hubbing operation,” said interim Aviation Director Brent Cagle. “That seems to be sort of the conventional wisdom when it comes to Charlotte, and it seems to be what we’re seeing, the indicators, out of American.”

Charlotte’s metropolitan population is 2.5 million, compared with 9.5 million for Chicago, 5 million for Miami and 6.8 million in Dallas.

Cagle said he expects the number of international flights will grow as the local population expands.

“The future looks bright, but right now we don’t have just quite enough critical mass of (local travelers) to support a massive influx of international flights,” Cagle said. “All the other pieces are there. We’re very cost-competitive; we have a great location.”

Chuck Schubert, American’s vice president of network planning, said the airline is still early in the process of combining routes and figuring out what flights make the most sense.

“Even though we’re six or seven months into the merger, we’re still very much into the early stages of rationalizing the network,” Schubert said. “Charlotte’s one of our biggest, and strongest, hubs.”

Schubert acknowledged Charlotte has a smaller local population than its other large hubs, but said the airport will remain important because it connects a lot of smaller markets that wouldn’t make sense to serve out of other hubs.

“It serves a lot of unique points that are not served out of most, or in some cases any, of our other hubs up and down the East Coast,” he said.

Going forward, Schubert said international service at Charlotte will continue to be oriented toward the Caribbean, South America and Europe. Although some analysts have speculated that Charlotte Douglas could lose much of its Caribbean and Latin American flying to Miami, Schubert said the two hubs have enough of a different base that Charlotte could support much of its network.

“They are similar, but not the same,” he said. Miami has a bigger market for local Latin American travelers, while Charlotte is better for many connecting passengers, Schubert said. Charlotte Douglas is also a lower-cost airline.

Laying the foundation

Under Cagle, Charlotte Douglas is preparing for international expansion. The airport is finishing a capacity study this year to justify funding a new, longer runway that could open in four to five years, offering enough length for fully-loaded airplanes to take off for destinations in Asia.

“The next runway we build will be a 12,000-foot runway,” Cagle said. “We’re going to build a runway that’s capable of handling the biggest aircraft in the world.”

The airport recently rolled out automated passport kiosks meant to speed international travelers’ arrival. And Charlotte Douglas is preparing to start work on a new concourse north of Concourse A, where rental cars are parked now. Once the cars move into a new parking deck directly in front of the terminal, Cagle plans to start construction on new gates there.

But the new gates will be for domestic flights, not a separate international terminal as had originally been planned. Cagle said the new gates could eventually be converted into a separate international terminal, but that wouldn’t be cost-effective now, when the demand for more domestic gates is stronger.

On the top of economic developers’ wish-list: Direct flights from Charlotte to Asia.

Jeff Edge, head of the Charlotte Chamber’s economic development team, said direct flights to international destinations are a powerful recruiting tool for luring foreign companies. With the growth of Asian-owned firms in the area, he sees such destinations as potentially more attractive now.

“I think Shanghai would be one of our top two or three destinations, from an economic development perspective,” Edge said. “I think a flight to Tokyo would be of great interest to help us draw more out of Japan.”

But Schubert said American isn’t looking to add direct service from Charlotte to Asia. For now, the airline is focused on making its new flights from Dallas/Fort Worth and the rest of its Asian network function well.

“We’re really trying to get our arms around those,” he said. “At least in the short to mid-term, there are not a lot of plans to go further than that.”

“That doesn’t mean it would never happen,” Schubert said of Charlotte-to-Asia service.

New York-based aviation consultant Bob Mann said he doesn’t think Charlotte’s relatively small population and high mix of connecting traffic will prevent Charlotte from getting new international service. All flights are a mix of business travelers and leisure, he pointed out.

He points to the new airline partners from the Oneworld alliance, which US Airways joined after merging with American. Oneworld airlines such as Cathay Pacific, Japan Airlines and Iberia could be eyeing Charlotte Douglas.

“It’s a high-performing hub,” he said. Charlotte Douglas also has an advantage as one of the two main connecting hubs in the Southeast, along with Atlanta.

How Charlotte stacks up

Charlotte is heavily dominated by American Airlines, which accounts for more than 90 percent of daily flights. The airport is primarily a hub for connecting passengers.

Though an average of 120,000 travelers pass through Charlotte Douglas a day, about 80 percent of them are connecting from one flight to another, not starting or stopping their journey in Charlotte. Connecting passengers are usually lower-yielding, making less money for the airlines than passengers paying higher, nonstop fares. Think Walmart vs. Nieman Marcus: A high-volume, low-margin business.

Charlotte Douglas is the eighth-busiest airport in the U.S., with 43.5 million passengers in 2013. The majority of those were domestic passengers: Charlotte Douglas recorded 2.8 million international travelers last year. That was up more than 4 percent from the prior year but still accounted for only 6.4 percent of the airport’s total passengers.

So far this year, the number of international travelers at Charlotte Douglas is up 4.4 percent from last year. Through April, 915,000 international travelers passed through Charlotte Douglas.

A look at some of the other hubs in the American network shows Charlotte Douglas has a relatively small share of international travelers compared with other large hubs.

According to the U.S. Department of Transportation, JFK had 26 million international passengers last year, accounting for 56 percent of its travelers. Dallas/Fort Worth had 6.4 million international travelers, making up 17 percent of its total passengers, and Miami had 19.4 million, accounting for 34 percent of its total passengers.

Since the US Airways-American merger, Charlotte has seen some growth and some cuts in its international service. American plans to end Charlotte’s daily nonstop flight to Rio de Janeiro at the end of the year. The airline has also cut the frequency and running time of new seasonal flights from Charlotte to Manchester, England; Brussels, Belgium; Lisbon, Portugal; and Barcelona, Spain.

Lufthansa, which flies daily from Charlotte to Munich, lost US Airways as an alliance partner when US Airways joined Oneworld. But the German carrier has pledged to continue its Charlotte flight, saying strong demand from the region’s almost 200 German-owned firms makes the flight worthwhile.

One thing Cagle said Charlotte Douglas will do more of in the future is going out and actively recruiting airlines to serve new routes.

“We do not have a strong air service development program,” Cagle said. “That’s primarily because we have no vacancy. Now, I think going into the future we need to look at air service development on international.”

Charlotte Douglas has primarily relied on its low-cost model to attract airlines, with the heavy dominance of US Airways bringing dozens of destinations. Cagle said he expects the airport’s recruiting efforts will focus on getting service to geographic areas, such as the Pacific Rim, rather than luring specific carriers.

“We haven’t engaged in that really at all up until this point,” Cagle said. “We’ve been in the enviable position of not needing to.”

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